Mercantile Adjustment Bureau, L.L.C. v. Flood
278 P.3d 348
Colo.2012Background
- Flood sued MAB in county court under the Colorado Fair Debt Collection Practices Act over a debt-collection letter and third-party disclosure.
- Flood lost at the county court; her trial counsel Merenstein advanced the fees for appellate counsel to pursue an appeal, intending reimbursement from any fee award.
- Flood prevailed on appeal to this court, and the case was remanded to determine entitlement to and amount of appellate attorneys' fees.
- The county court awarded Flood appellate fees; MAB challenged, and the district court affirmed that ruling.
- The Colorado Supreme Court held that Merenstein did not violate Rule 1.8(e) by paying Flood’s appellate fees, but remanded to determine whether Flood is entitled to appellate fees for the current appeal and the amount.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Merenstein violate Rule 1.8(e) by paying appellate fees? | Flood argued expenses were permissible litigation expenses; MAB argued unethical financial assistance. | MAB contends payment violated Rule 1.8(e) and body of ethics rules. | No violation; appellate expenses permitted as litigation expenses under Rule 1.8(e). |
| Do Colorado Appellate Rules apply to a county-to-district court appeal for fee requests? | Flood: rules apply only to Court of Appeals/Supreme Court; not here. | MAB: appellate rules govern fee requests. | Appellate Rules do not apply; remand to determine appellate fees under appropriate procedures. |
| May non-clients raise alleged ethical violations in the litigation? | MAB has standing due to potential prejudice and fairness concerns. | Typically non-clients cannot raise ethical issues; here it could affect fairness. | Non-clients may raise if the issue threatens fairness; court acknowledged threshold question and proceeded. |
Key Cases Cited
- Blanchard v. Bergeron, 489 U.S. 87 (U.S. 1989) (fee-shifting and lodestar considerations noted for reasonable fees)
- Martin v. Allen, 193 Colo. 395 (Colo. 1977) (awarding appellate attorneys' fees under fee-shifting statutes)
- People v. Gabriesheski, 262 P.3d 653 (Colo. 2011) (defining client-attorney relationship and external fee principles)
- Fognani v. Young, 115 P.3d 1268 (Colo. 2005) (ethics issues intertwined with litigation can arise in proceedings)
- Nutt, People v., 696 P.2d 242 (Colo. 1984) (contingent fee arrangements and access to counsel considerations)